Jan.15

electoral-vote.com

Dem 47

   

GOP 53

Trump Has an Affordability Plan: Threaten Whole Industries

Donald Trump has gotten the message that the voters care about affordability. He is starting to work on it using the tool he (and all mob bosses) know best: threatening people. Here are three examples:

• Health Care: Trump is going to call the leaders of health insurance companies to meet him and then demand that they lower premiums. Could they cut them a little bit and just absorb the losses? If he threatens them enough, maybe they could do it until the midterms. That's all he really cares about, after all. Then they could raise them afterwards to make up for it.
  
  Needless to say, this approach will not make any structural change in the system. An analysis by KFF (formerly Kaiser Family Foundation) shows the major driver of health care costs is what hospitals charge. To permanently lower premiums, hospitals have to charge less. KFF Senior Vice President Cynthia Cox said: "Prescription drug spending and insurance company overhead and profits is a tiny slice of the pie compared to spending on hospitals and doctors." Sen. Rick Scott (R-FL), who used to run the largest hospital company in America (which was fined $1.7 billion for billing fraud), agreed: "I used to run the largest hospital company so I can tell you, insurance can't charge a whole bunch less if the hospitals charge more." The reality, of course, is that hospitals have no incentive to lower costs. It is very rare for patients to do comparison shopping based on price, as they might when buying a TV. At most, they might check out where the "best" doctors are, but rarely where the cheapest ones are. The U.S. spends twice as much per capita as other wealthy countries and still ranks 48th in the world in longevity, behind Malta, the UAE, Greece, Costa Rica, Panama and even Albania. Much more radical change is needed in the system than having a few executives cut prices for a year.
  
  
• Credit Card Interest: Another expense Trump wants to get down by ordering executives around is credit card interest. Because so much stuff is unaffordable, people put it on their credit cards and then get socked with high interest rates. In 2024, the 195 million Americans with credit cards paid $160 billion in interest. That's $821 per person in interest, and it's all lost money. Trump's plan is to have banks reduce the interest rate on credit cards to 10% until after the midterms. Current interest rates are around 20%. It is not expected that the banks will receive this plan with great joy. Also not Wall St. The banks have said that if they are forced by law to do this, they will cut costs by cutting credit to high-risk (i.e., poor) people, forcing them to use payday loans and pawnshops. In the end, only Congress could actually force banks to lower interest rates, not the president.
  
  
• Home Prices: On this one, Trump may actually have hit upon something that could work, but it would have fierce opposition. His idea is to ban corporations or large investors from buying single-family homes. He posted: "People live in homes, not corporations." The effect of such a ban would take years to have effects, and they would not all be positive. While it would prevent wealthy corporations from outbidding individuals looking for a home, there is also a downside. When a corporation buys a home, it rents it out. Banning this practice might reduce home purchase prices eventually, but it might also work to raise rents, as well, by reducing the supply of properties available for rent. Currently, about 3% of all single-family homes are owned by institutional investors, although in some cities it is much higher. For example, in Jacksonville, FL, it is 21% and in Charlotte, NC, it is 18%. In any event, this also requires congressional action and if enacted, would take years to have an effect.

In short, even if enacted, these plans are all basically putting lipstick on a pig. None of them will do much to fix the underlying problems that are creating the unpopular economic impacts. On the other hand, Trump doesn't give a hoot about whether any of these plans work to increase affordability. When no one else is listening, what he is likely to tell each group is: "I want you to announce that we have a deal that will lower costs. I don't care if you do or don't do it. What I care about is the announcement, not the ensuing action or lack thereof." Under these conditions, he might actually get the announcements. (V)